Market close: High interest rates and falling dollar hurt NZ market

Mainfreight continued its slide, down 71c to $56.30. Mainfreight has fallen from a two-year high of $94.99 achieved on December 13, 2021.

The New Zealand sharemarket had its seventh successive fall as it continued to be battered by increased interest rates and a weak New Zealand dollar.

The S&P/NZX 50 Index recovered slightly in the afternoon and closed at 10,741.57, down 25.25 points or 0.23 per cent. The index has now fallen in 10 of the last 12 trading days, and is down more than 6.4 per cent for the year.

There were 72 decliners and 50 gainers on the main board and trading was again light with 20.49 million shares worth $61.54 million changing hands.

Jeremy Sullivan, investment advisor with Hamilton Hindin Greene, said the Israel-Hamas situation has created volatility in gold and oil prices, resulting in increasing inflation and interest rates which are hurting the New Zealand market.

“We are also halfway through the [latest] United States reporting season and 78 per cent of the 245 companies on the S&P 500 were ahead of estimates. You can argue the earnings have been relatively robust.”

Gold, an alternative investment, has broken through the US$2000 market and was trading at US$2001.37 an ounce at 6pm New Zealand time.

The New Zealand dollar traded at US58.26c against the American greenback, after reaching an intraday low of US58.03c, and the cross-rate is now the third-lowest in 20 years - it reached US55.9c in September last year.

Sullivan said the low dollar doesn’t help when paying for oil imports and prices will continue to stay high at the pump. “Oil is a sticky commodity and it means the Reserve Bank will hold interest rates higher for longer.”

Sullivan said the fixed interest market was sitting at 16-year highs. Bank term deposits for 12 months were more than 6 per cent and “you are getting returns you normally expect from shares while taking less risk”.

“The local sharemarket is undergoing an orderly correction but a lot of value in fundamentally sound companies is starting to appear,” he said.

In the United States, the S&P 500 and Nasdaq Composite indices have entered correction territory after falling more than 10 per cent from their recent highs.

At home, Fisher and Paykel Healthcare rebounded 35c to $20.80 but Mainfreight continued its slide, down 71c to $56.30. Mainfreight has fallen from a two-year high of $94.99 achieved on December 13, 2021.

Chorus declined 16.5c or 2.28 per cent to $7.085; Freightways was down 10c to $7.50; and SkyCity Entertainment slipped 5c or 2.63 per cent to $1.85.

ANZ Group was down 43c to $26.87, fellow banker Heartland Group decreased 4c or 2.55 per cent to $1.53; PGG Wrightson shed 15c or 4.48 per cent to $3.20; and Rakon fell 4c or 5.8 per cent to a 33-month low of 65c.

The property sector was weaker, with Investore falling 4c or 3.36 per cent to $1.15; Goodman Trust declining 4c or 1.99 per cent to $1.97; Precinct decreasing 2.5c or 2.27 per cent to $1.075; Vital Healthcare Trust down 4c or 1.99 per cent to $1.97; and Argosy shedding 2c or 1.87 per cent to $1.05. But Stride Property was up 3c or 2.36 per cent to $1.30.

Air New Zealand increased 2.5c or 3.85 per cent to 67.5c after telling the market that first-half earnings before taxation are expected to be $180m-$230m. This is based on an average jet fuel price of US$110 a barrel of crude oil.

The airline holds $200m in Covid-related credits and the expiry date for the credits has been extended to January 31, 2026 for booking travel through to December 31, 2026. Air New Zealand carried 1.6 million passengers in September, an increase of 7.9 per cent on the same period last year.

Synlait Milk rose 7c or 5.51 per cent to $1.34, after making an investor presentation at its Pokeno processing plant, though no new material nor a trading update were provided.

Tourism Holdings gained 6c or 1.82 per cent to $3.35; Serko added 7c to $4.02; Sanford was up 10c or 2.67 per cent to $3.85; The Warehouse collected 4c or 2.34 per cent to $1.75; Smartpay improved 3.5c or 2.62 per cent to $1.37; and Cannasouth increased 1.6c or 8.99 per cent to 19.4c.

NZX, unchanged at $1, reported increased revenue for the third quarter to $27.84m, up 12.5 per cent. Year-to-date revenue was $81.79m, up 15.3 per cent.

The on-market value traded in the third quarter was $4.77 billion, down 6.8 per cent, and total trades fell 10.2 per cent to 2.095m. But the daily average value traded was $135m, up 5.8 per cent. The total capital raised was $2.966b, down 46.9 per cent.